The Insurance Regulatory and Development Authority (Irdai) has asked the country's largest insurer, Life Insurance Corporation (LIC), to reduce its stakes in ITC and L&T to 15 per cent by December 2018.

The insurer recently raised its stake in cigarette maker ITC by 2 per cent to 16.3 per cent, and has also sought the Insurance Regulatory Development and Authority (Irda's) permission to increase its stake in India's biggest engineering company Larsen & Toubro by another 5 per cent to 20.7 per cent.

The regulator has not asked LIC to sell its stakes in these two companies immediately as it will cause volatility in the market. Moreover, the regulator would extend the time by a year for LIC to reduce its stakes in these two companies if it needed more time to do so, said Sathe.

However, in companies where LIC has strategic investments, like Corporation Bank and LIC Housing Finance, it does not have to reduce its stakes to 15 per cent or less.

LIC could continue its strategic investment in other companies beyond 15 per cent as usual, particularly in Corporation Bank and LIC Housing Finance, said Irdai member Nilesh Sathe on the sidelines of the CIIÆs 19th Insurance Summit.

According to filings with the BSE, the state-owned life insurer held about 16.25 per cent in ITC and 17.97 per cent in L&T in June 2017. The ITC stock closed 0.27 per cent lower at Rs 280 per share and the L&T share closed flat at Rs 1,178 per share on Monday.

Globally insurance companies are increasing investment in digital technologies, but Indian firms are lagging behind, a report said.

"Global average investment in digital technologies is increasing over the years, while the insurance industry in India is lagging, both in its level of digitalisation and its ability to realise financial returns on its digital investments," a CII-PwC report on 'Evolving considerations for the Indian Insurance Industry' said.

Moreover, leveraging low-cost digital distribution channels for sales and service is likely to play a significant role in helping insurance companies deepen market penetration, it added.

Simplification of process will also lead to some degree of uniformity in the expectations of customers in their interactions with multiple insurers, it said.

Instead of all risk products, people are demanding simple one-risk cover products, which are easy to understand and allow customers to choose discrete individualised need- based covers, it added.

The report also said that with digitalisation, insurance companies should be wary of new modes of fraud.

IRDAI working with government to create a simple platform for KYC08-Aug-2017 (09:39)

Insurance Regulatory and Development Authority of India (IRDAI) on Monday said though Aadhar is not a mandatory requirement for Know Your Customer (KYC) in the insurance sector, it is the most simple form of KYC document.

"Aadhar is not mandatory for the (insurance) sector but is the most simple one. On the government level they are creating a platform for all the KYC. "We are also working with the government for very simple KYC. But what can be simpler than a Aadhar," IRDAI Chairman T S Vijayan told reporters on the sidelines of CII's 19th Insurance Summit.

Talking about Life Insurance Corporation's (LIC) shareholdings in listed companies, Vijayan said regulation for investment is 15 per cent, in exceptional circumstances sometimes exemptions are given to invest more.

"All the investment should be for the benefit of policy holders and investors and the companies should not be locking the money in and they should use the funds for the policy holders.

"Regulation is 15 per cent, and when someone asks, in exceptional circumstances, we will give them some exemptions. Sometimes we give them liberty to invest more. At some point of time we advice them to bring it down to 15 per cent," he added.

Talking about distribution, the regulator urged the industry to strengthen distribution saying there is a need for merging technology with human touch. "We have to understand that more than 20 lakh people get their income from distribution. Even if technology is adapted extensively insurance products distribution needs a human touch.

"However, one has to understand that the agent requirement and growth depends on the company's growth strategy," he added. Also present on the occasion, LIC Chairman V K Sharma said only technology cannot prevent incidents of frauds.

Regarding digitisation and frauds, he said, "Only digitisation and technology cannot solve the problem of frauds. As technology advances frauds also go up. We have to develop digital and human matrix capturing individual behavioural data to prevent frauds."

GIC Re files for IPO, may raise over USD 1 billon07-Aug-2017 (17:59)

General Insurance Corporation of India Re (GIC) on Monday filed the draft red herring prospectus (DRHP) for its initial public offering (IPO), which bankers have said could raise more than USD 1 billion, as part of the government's plans to list five non-life insurers in which it holds stakes.

GIC Re's filing comes amid a surge in IPOs in Asia's third-largest economy, which has spurred a slew of insurers to pursue listings, including SBI Life Insurance Co Ltd, a unit of State Bank of India.

The government will be selling about 107.5 million shares in GIC Re's IPO, while the insurer will sell 17.2 million new shares, comprising a total 124.7 million, or 14.22 percent of the company's post-issue share capital, according to the filing.

The proceeds would help the government meet its fiscal deficit target of 3.2 percent of gross domestic product for the year ending in March, which includes selling of stakes in companies.

Life insurance companies have latched on to health as the fastest way to grow. In the past six months, the number of products that offer special cover for heart disease and cancer treatment have more than doubled.

ICICI Prudential Life's ICICI Pru HeartCancer Protect, for instance, pays part of the insurance cover to the customer on diagnosis of a heart ailment or cancer. Customers can choose the type of cover, either for heart or cancer, or have the option to purchase both.

"Health insurance forms a small part of our premium income as of now," said Puneet Nanda, executive director, ICICI Prudential Life Insurance.

"We expect growth rate for protection to be higher and are focusing on growing the overall protection segment."

Health insurance makes up around 25% of the general insurance industry while it is less than 5% of the life insurance industry. Heart ailments and cancer together account for over 50% of health problems among Indians, said Nanda.

Similarly, Birla SunLife's CritiShield Plan offers three types of benefits: cardiac benefit, renal benefit and comprehensive benefit. In cases of both (cardiac and renal), at the diagnosis of an early stage cardiac or renal condition, 30% of the sum assured will be paid to the life insured, and at the diagnosis of a major stage cardiac or renal condition, 100% of the sum assured is paid.

"Indians are prone to heart ailments due to multiple factors including genetics, unhealthy diet, sedentary lifestyle, stress etc, making it the Cardio Vascular Disease capital of the world," Aviva stated in a report.

According to reports, heart attacks and chronic kidney disease comprises the top-10 causes of death in India. Medical research shows that India has the highest rate of cardiac arrests in the world with around 2 lakh heart surgeries conducted every year. Cancer cases are expected to rise by 25% by 2020. Every 13 new cancer patient is from India, show ICICI Prudential data.

"People are buying products for illnesses that are discomforting to them," said Sanjay Datta, head of underwriting, ICICI Lombard General Insurance. "There are products covering several critical illnesses for years but now companies are launching single critical illness products as well."

While cost of treating a heart attack can cost between Rs 2.8 Lakh and Rs 10 lakh, the expenses for a kidney transplant can be Rs 4.2 lakh Rs 6.9 lakh, states a Birla Sun Life report.

SBI Life Insurance AUM cross Rs 1 lakh crore05-Aug-2017 (09:42)

A record bancassurance sales figure has helped SBI Life Insurance's assets under management (AUM) cross the Rs 1-lakh-crore milestone.

The big push into bank distribution comes as the company prepares for the first IPO in the State Bank of India group in 23 years.

SBI Life Insurance's bancassurance sales grew at a compounded annual growth rate (CAGR) of 46.7% from Rs 1,944 crore in FY2015 to Rs 4,185 crore in FY2017, compared with a CAGR of 27.2% for private life insurers in India during the same period. This has helped the company become the second-largest private insurer in new business premium with a market share of 20.6%.

SBI Life MD & CEO Arijit Basu said in a release that premium from bancassurance is set to increase on two fronts. The bank has signed on two new partners - Punjab and Sind Bank with 1,500 branches, primarily in north India, and South Indian Bank with 850 branches, primarily in south India.

SBI Life also expects there to be better engagement with the branches of the erstwhile SBI associate banks, which are now SBI branches.

"Besides bancassurance partnership, we are also providing cover to customers of other banks by selling them group insurance policies. These are largely in the form of protection for home loan customers," said Basu. Despite the large branch network of its parent, SBI Life sold policies predominantly through agents until a few years back. The contribution of bancassurance has been steadily rising from 47.8% in FY15 to 53% in FY17.

Genpact acquires insurance cloud provider OnSource03-Aug-2017 (16:55)

Global professional services firm Genpact on Thursday announced the acquisition of US-based OnSource, provider of a leading Inspection-as-a-Service (IaaS) product for property and casualty (P&C) insurance carriers and their customers. The terms of the financial deal were yet to be disclosed.

"OnSource's innovation and ability to disrupt insurance claims operations to both save insurance carriers time and resources, and provide a seamless customer experience, is a critical addition to our digital-led insurance service offerings," said Sasha Sanyal, Senior Vice President, Insurance, Genpact.

As part of its ongoing strategy to drive digital-led innovation and digitally-enabled intelligent operations for clients around the world, Genpact is investing in leading technologies that reimagine the customer experience and radically change how companies compete.

OnSource uses advanced technologies - such as real-time browser-based communication, self-service applications, and drones - to put consumers in control of their insurance claims and fundamentally transform the process for insurance carriers.

Private life insurer SBI Life Insurance is eyeing treatment of cancer to expand its offerings in the health sector.

The company, launching a new term product to meet cancer treatment, said in the next few years, India would be the second biggest country of patients diagnosed with cancer.

"The first cancer treatment specific product from SBI Life will be available for persons in the age group between six and 65 years," Anand Pejawar, president (operations and international business), told reporters in Kolkata on Tuesday.

The biggest merger in the life insurance industry, between HDFC Standard Life and Max Life, was called off on Monday. In a statement to the exchanges, Max Life said the proposal had been called off and the exclusivity agreement with HDFC Life, which expired on July 31, would not be renewed.

This paves the way for HDFC Standard Life's initial public offer (IPO), which is expected by December, according to company executives.

"The prospective partners evaluated several structures over the last month. However, the inordinate time associated with finalisation and approval of these structures led to this decision," the statement said.

HDFC Standard Life executives said the companies would approach the Insurance Regulatory and Development Authority of India (Irdai) to withdraw their merger proposal.

"After this, we will approach the Securities and Exchange Board of India to file our IPO prospectus," an executive said. HDFC Standard Life expects to complete its IPO by December.

"Given there are more than 20 players in the industry, we are scouting for companies we can acquire," said a Max Life executive.

"There can be no certainty that any options relating to the merger will be viable, in which case Standard Life intends to propose an IPO of HDFC Standard Life at the earliest possible opportunity," Standard Life had said in a statement.

The Securities Appellate Tribunal on Monday ordered 'status quo' for a week on insurance regulator IRDAI's direction for transfer of embattled Sahara group's life insurance business to ICICI Prudential Life Insurance.

The tribunal fixed the next hearing in the matter on August 7 when it will decide on the maintainability of the petition filed by Sahara Life Insurance against the IRDAI order.

Last Friday, the Insurance Regulatory and Development Authority of India (IRDAI) had asked ICICI Prudential to take over the assets and liabilities of Sahara Life from July 31.

Sahara Life on Monday approached the Securities Appellate Tribunal (SAT), which is mandated to hear pleas against orders passed by financial sector regulators like Sebi, IRDAI and PFRDA, against the insurance regulator's order.

Sahara Life Insurance was represented by law firm Markand Gandhi & Co.

Following the SAT decision, Sahara group also said in a statement that the tribunal has granted "status quo" until it completes the hearing on August 7.

This means, the order passed by IRDAI has been stopped from being implemented until further orders, Sahara said.

Earlier, the IRDAI had appointed administrator to take over the control of business of Sahara Life. IRDAI subsequently directed ICICI Prudential to take over the business of Sahara Life.

Sahara alleged that the IRDAI order was passed "to benefit a third party and in violation of principles of natural justice".

Challenging the order, Sahara Life said its business was continuously in profit and the company has been in "absolute and strict compliance of all regulatory norms/directions issued by IRDAI and that there has not been even a single case of any complaint of non-payment of any claim to any policy holder".

"Though the regulatory requirement of solvency margin is only 1.5, Sahara Life has been maintaining solvency margin of more than 8 which reflects the sound financial health of the company," Sahara said.

"However, it was unfortunate that IRDAI has stopped Sahara Life from selling new life insurance policies and to underwrite new business and directed ICICI Prudential to take over the existing life insurance business portfolio of Sahara Life."

"IRDAI had not even framed any scheme, to safeguard the interest of policy holders, which is a statutory requirement before transferring the business to ICICI Prudential."

"The order was passed in great hurry and there was neither any transparency in the action of IRDAI nor the legal provisions were complied with," the group said.

FinMin official Ravi Mittal appointed part-time member on IRDAI board31-Jul-2017 (09:48)

Ravi Mittal, who has joined as an additional secretary in the Ministry of Finance in place of Anil Khachi, is now a part-time member of the Irdai (Insurance Regulatory and Development Authority of India) board, a ministry source said.

Mittal has replaced N S Rao at Irdai, who is a joint secretary level officer.

Former finance secretary Sushma Nath is another part-time member on the Irdai board, a Ministry source told PTI.

Besides, Maruthi Prasad Tangirala, a 1990-batch IP&TAFS (Indian Post & Telecommunication Accounts and Finance Service) officer, has been appointed as an executive director (ED) at Irdai and his position will be equivalent to a joint secretary.

Mamta Suri, who has been working as a chief general manager (CGM) at Irdai, has now been promoted as ED and appointed in the same position at the Insolvency and Bankruptcy Board of India (IBBI), the source added.

Suresh Mathur, who was posted at the Insurance Institute of Risk Management at Hyderabad last year, is now back at Irdai as ED and will be handling reinsurance portfolio.

Sahara to challenge IRDAI order on life insurance business transfer to ICICI Pru31-Jul-2017 (09:30)

Embattled Sahara group today said it will approach court of law against irdai order directing transfer of its life insurance business to ICICI Prudential and alleged that the insurance regulator has "wrongly concluded" that the promoter was no more 'fit and proper' and a sum of Rs 78 crore was siphoned.

In a statement following irdai (Insurance Regulatory and Development Authority of India) order dated July 28, the group said Sahara Life business is being "wrongfully" given to ICICI Prudential Life Insurance.

"Sahara Life is doing business since 2004 and since last 7 years running continuously in profit and has been in absolute and strict compliance of all regulatory norms and directions issued by irdai," the group said.

It further said Sahara Life's asset is more than its liability and there is not a single complaint of non-payment by any policy holder.

"However it is unfortunate that irdai has handed over Sahara Life business to other insurance company ICICI Prudential," the group alleged.

Giving a point-wise rebuttal to the charges of irdai, the group said the main allegation talks about the promoter company's promoter shareholder Subrata Roy Sahara, having been incarcerated, which was a judicial custody, and therefore the promoter company of life insurance venture is no more "fit and proper".

On irdai action, the group said the second allegation is that a sum of 78 crore has been siphoned, "which is wrongly concluded".

"In fact this amount was kept as security deposit to one entity Sahara India who has provided furnished, computerised office accommodation in around 150 places," the group said.

It further said the security deposit is there since Sahara India is not charging any rent, electricity charges etc and this arrangement is very beneficial for Sahara Life, whereas irdai has concluded in "such unwise manner".

The group further alleged, "On one hand irdai didn't give permission for branch expansion and now irdai is alleging that business is not increasing.

"irdai appointed administrator for the reason best known to them and the said administrator secretly submitted a report to the irdai for transferring the business of Sahara Life to any other entity," it added.

The group further alleged that any copy of the administrator's report was neither provided to Sahara Life, nor was it granted any opportunity of hearing on such report or before passing the order of transfer of business to any third entity.

"The company has never acted in any manner prejudicial to the interest of the policy holders. Sahara will pursue its remedy, against such approach of irdai, in the court of law," the statement added.

LIC posts 145% jump in profit from sale of equities in Q129-Jul-2017 (10:14)

Life Insurance Corporation of India (LIC) has registered a whopping 145 per cent jump in profit from sale of equities in the April-June quarter of the current financial year.

"This year our investment profit growth is 145%. We have earned over Rs. 6,100 profit on sale from equity in April-June 2017 from Rs. 2,489 crore in April-June 2016. It (equity investment) will be in this range Rs 50,000) this financial year," said chairman VK Sharma.

"We have invested around Rs 16,000 crore in equities until July-end from Rs 43,800 crore which had been invested by us in equities in the last fiscal," he said.

Typically, LIC invests Rs 50,000 crore in equities, the only exception was in 2014-15 when it shot up to Rs 65,000 crore, largely due to our investments in the OFS of Indian Oil and ONGC, Sharma said.

"So even in this year we expect equity investments to remain in the same range," he added.

According to Sharma, LIC is eyeing a double-digit growth in business (in terms of both premium and policy as well for the current fiscal.

In equity investment, LIC will invest in line with its business growth in the current fiscal. "We expect to increase our investments in double digit in equities too."

LIC has made a total investment in debt at Rs 2.62 trillion in the year gone by.

LIC, he said, has set a premium collection target from new business on individual basis at Rs 38,000 crore in the fiscal from Rs 37,800 collected by it in FY17.

"In the first quarter we have grown roughly by 10-11 per cent and in July also our growth is more on that, so we are on track, in terms of new business premium," he said.

Life Insurance Corporation to invest in GIC IPO29-Jul-2017 (09:56)

Life Insurance Corporation (LIC), country's largest insurer, is planning to invest in General Insurance Corporation's (GIC) Initial Public Offering (IPO), which is expected to file its initial share sale prospectus in the next couple of weeks.

However, LIC has no plans of investing in the upcoming IPO of SBI Life Insurance as it is a competitor of the country's biggest institutional investor in the life insurance business, said V K Sharma, Chairman of LIC.

However, he mentioned that there is no restriction by regulator Insurance Regulatory and Development Authority of India (IRDAI) on LIC to participate in the upcoming IPOs of insurance companies.

On the issue of reducing its stake to 15 per cent in the companies where it has more than 15 per cent stake, Sharma said LIC replied to the IRDAI order and will not be able to comment on the matter as it was price sensitive.

The non-performing assets (NPA) of the public insurer was to the tune of Rs 18,000 crore in FY18, of which Rs 13,000 crore were in cases where Joint Lender's Forum (JLF) has been formed and Rs 4,000 crore was in individual lending. However, there was 100 per cent provision made for the entire amount of NPAs of the public insurer.

"KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary."

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"No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."